Author Topic: Canadian case study - 34 yrs old  (Read 7240 times)

Intrigue

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Canadian case study - 34 yrs old
« on: April 10, 2018, 09:35:07 AM »
Hi guys,
I have a few questions but first, let me give you some context :
I have been frugal without even knowing it because I bought my first house (way too big) when I was 20 years old. I then realized on my first mortgage payment that I was only paying interests.
This made me go nuts and for the following 10 years, I lived a very frugal life (besides driving around instead of biking.. My mustache wasn't really aware of the true cost of driving since I only started to read this blog last week).
I also had people who rented rooms at various times during this 10 years period.
Therefore, I put ALL of my take-home money on the mortage and I've been mortage free for a few years now, woohoo !
Since then, I kept some good frugal habits but I also lost some :(  (As you'll see in the details below)
I never made an "Exposed !" on my expenses as MMM so I decided to review my 2017 expenses and it was eye opening for me. I wish I did that before...
My house is costing me waaaay too much money. as in 9K out of 24K. I'll remedy this soon. Renovations are on the way and I'll sell it afterwards and move to something MUCH smaller.
I've been criticized all my live of being cheap even tho I believed I wasn't because I was investing in my future by getting rid of the mortage instead of *insert useless stuff people buy to make them happy in the short term*.
I'm a workaholic so I do not see myself retiring for


So i'm a 34 years old man software developer living in QC, Canada
1 girlfriend (29) who doesn't like to be frugal but is starting to be more conscious about money. (It's a good first step if you ask me)
No kid
One cat & one dog :)


My salary is 60K/year. (However, I'm a bit of a workaholic so I tend to do a lot of overtime so my actual salary varies a lot from year to year so let's assume I do 0 overtime)

My expenses in 2017 were 24K :
Municipal/School tax   $4793.52 (ouch...)
Electricity                   $2900.00 (even with electronic thermostat and minimum heating (19 at night and 16 during the day) and almost no ac.)
Home insurance           $1479.00 (now 900 for 2018)
Life insurance           $  900.00 (I want to keep this even tho I'll never use it for my familiy)
Car insurance           $  383.88 (I have a 2 years contract but I'll raise the franchise now that I know better reading MMM)
Licence + registration   $  302.84
Gaz                           $  747.00 (11km to work (7 miles).. I should bike more often there)
Internet                    $  750.00 (lower in 2018)
Cat food                   $  459.00
Dentist                   $    58.00
Clothes                   $  537.00
Cell phone                   $  881.91 (Ouch.. I'll make sure to change that at renewal in july. Only bought a cell phone once my house was paid so 2 years ago)
Wine                           $  355.00
Entertainment/gifts   $  399.47
Vacations                   $  767.87
Costco                   $5010.00 (Groceries are mostly here for me and my gf)
Restaurants           $1753.52 (This is what I meant by lost some good habits...)
Groceries                   $  208.62
Misc                           $1802.81 (I'm a sucka for technology but also working to bring this way down in 2018. Thanks to MMM for inspiration)
Mortgage                  $      0.00 (It feels GOOD writing this :))
Cable TV                   $      0.00

Assets / Investments :
House             $532700
Yaris 2007       $   3000
RRSP              $100000 (with work) @ 0.8% magagement fee in mutual fund
RRA                $100000 (with work) @ 0.8% magagement fee in mutual fund
Bank account  $  70000 (In a checking account... I am now realizing how stupid it is while reading MMM bingely)

For a total net worth of 805K.

For the 70K, I want to invest it in a TFSA asap but I am still not sure where to put it. (I know the max TFSA contribution is 57K)
I looked at the vanguard us funds but after reading the comments on the frugal toque article, I learned that I would be taxed at 15% so it is a bad idea.

Reading MMM was eye opening for me. I need to continue to binge read MMM instead of binge watching shows I don't even like.
I realize I did some good choices in the past by getting rid of the mortage but I did not do anything smart since then...


Ok, so here are my questions:
1- Where should I invest my TFSA (maximum contribution of 57K) ?
2- Where should I invest the remaining 13K ? (It's not a lot but 13K employees is better than 13K couch potatoes as they are now !!!)
3- I did not mention this but my GF has 50K in her savings account because she doesn't know where to invest it. However, she wants it to be available at all times. Any ideas ? (She has 0 RRSP et 0 TFSA)
4- How long until I retire ? I must calculate wrong because it says "now" when I do it... and I don't know how this could be, I'm not Badass like MMM !!


Thanks a lot for your help/input guys !
« Last Edit: April 10, 2018, 09:43:57 AM by Intrigue »

FrugalFan

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Re: Canadian case study - 34 yrs old
« Reply #1 on: April 10, 2018, 10:45:54 AM »
You are definitely doing great. In answer to your questions, from a fellow Canadian:

1 - Open an account a Questrade and buy Vanguard index funds (I have 50% international, 25% Canadian, 25% bonds) or use their new super easy One Fund Solution (http://canadiancouchpotato.com/2018/02/05/vanguards-one-fund-solution/). Your mutual fund expense ratio is not that high for Canada (I used to pay close to 3%!), but I would consider transferring your RRSP to Questrade eventually too.
2 - If your RRSP is maxed out, you can use Questrade to invest in a taxable account, but you may want to keep a bit aside for emergencies in a high interest savings acccount (I use Hubert which pays 2% currently).
3 - You need 25X your annual expenses INVESTED to retire using the 4% rule. I didn't see the total for your expenses but it looks like roughly 25-30k? So you would need $625,000 - $750,000. If you sell your house, and buy a smaller house, you should invest the difference. You will not be quite there yet but it shouldn't take you too long to get there. If you rent instead, you need to subtract the property taxes from your expenses and add the rent. So you would need a bigger stash to cover the greater expenses, but you could invest all of the value of your house. Remember to also include in your expenses savings for house repairs (if you still own a house), car replacement, etc. I save amounts for this monthly even if I don't use it, and just count it as part of our expenses for the purpose of budgeting and figuring out how much we need.

Lews Therin

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Re: Canadian case study - 34 yrs old
« Reply #2 on: April 10, 2018, 10:46:39 AM »
Ok Intrigue, you have lots and lots of information, and you are doing so well, you could literally fire tomorrow. (Though you don't want to, so take a breath, and realize you are already on the edge of the finish line

1) Start learning about how to use self-directed investments. Questrade is usually the one that is recommended, but National Bank has very cheap offerings too. I recommend reading Canadian Coach Potato, it will explain how to build a simple investment portfolio. (If you choose Questrade, I'd love to be the one to send you a referral link, it will give me 50$, and you 250$ if you transfer over 100k.

2) in a Taxable investment account (on Questrade, it's named a margin account). This is where all your money for investments have to go when both RRSP and TFSA are full.

3) First off, you should talk with your GF to understand why she wants it available at all times, or if she just wants "safe" investments. There are different options, such as safe portfolios (look at canadian couch potato for examples) that could cover her, or she could use bank accounts with special bonuses like tangerine that usually has 2.5% for new balances to accounts. (There is also a tangerine referral program, which is worth checking if you know someone that has an account to refer her, if you go with that option)

4) While I think you are slightly off for retirements (it would give you a YES due to the high NW and the low expenses) the fact that you only have 270k in money that is giving you returns would block you from firing immediately. On the other hand, if you were willing to move to a smaller place, and take a mortgage (Think of it as a very cheap loan, since you could put the money into safe investments and profit from the difference in the mortgage rate, and what your investments are giving you), you could be very close.

I.E. Your expenses are 24k on 200k investments, (which only return around 8k if you use the 4% rule) and you have over 400k available in your house, that is only covering the mortgage (so that money is not optimized)
Using a random mortgage calculator, and using 3% as the mortage rate, it gives you a monthly payment of 2k (1k of which is interest) So while the 400k is making you around 16k a year, you are only paying 11k in interest. That is what I mean about the mortgage being not optimized use of the money. However, some people do prefer to keep if for the safety, just be aware it is an option.

For your expenses, Insurances could probably go lower if you upped the principal, and make sure to keep shopping around for better deals. (And the home one will go lower with the new house)
Gas: Like you said, biking will help this
Clothes: Probably could do better, but only a tiny blip on your expenses
Cell phone:   75$/month?!! Just look at Koodo, you'll find much cheaper.
Costco: Doing meal planning, and shopping specials at your grocery stores will reduce this significantly. As a single guy, I'm around 100$/month. You can get this down by close to half if you start looking at specials, and buying in bulk when they are <2$/lb of meat. (Maxi, Super C, and I can't remember the third grocery will be better deals than Costco's normal prices, and since you will be going in with a list, you will no longer be buying other random higher priced things because it seems interesting, or if you do, you will realize this is special/it's an extra nice thing to have)
Groceries: 5.2k in groceries+other, higher than needed!
Restaurants: like you said, you know if it's important!

So looking at all this, you are spending 9k on your house, and have over 500k invested in the house itself. Is it that important that you are spending what can be argued to be 29k a year's worth of money on it? (the other 20k is the opportunity cost of having 530k invested in the house, returning only the price of rent.)

Still, very awesome situation to be in!
« Last Edit: April 10, 2018, 10:51:43 AM by Canadian Ben »

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #3 on: April 10, 2018, 08:41:10 PM »
Thanks for the great replies guys !!!
I appreciate the help and the time you took to reply.

I will be reading canadiancouchpotato as soon as I'm done reading MMM's blog. (or before... we'll see)

As I plan to sell the house within 1 year, I'll be able to cut most of my big expenses and replace them with much smaller ones :)


and to answer your questions :
I will definitely look into Questrade in the next couple of days. If I decide to open an account there, I will use your referral link for sure Ben. (I will send you a private message)
I will speak with my girlfriend but she doesn't like to talk about finance so I can't guarantee that I'll have a good answer from her anytime soon... haha. But I'll push her to put her money in a TFSA account. (questrade or hubert/tangerine depending of her answer)


For my expenses, cell phone is high but one of my coworker sent me a way to drop this significantly. The idea was to buy a "data only" plan and add an IP phone service to it.
Fido has a 2GB plan 15$/month. (available via costco)
Then you use an IP phone using your phone. My friend is using fongo.

One time fee of 25$ to keep your phone number
One time fee of 7$ to get rid of the ads on the mobile app.
20$/year to have unlimited text messaging.
If you talk a lot on your phone, you must be careful not to bust the 2GB limit if your not on wifi. Since I hate speaking on the phone, this won't be a problem.
It would cost about 20$/month. I did not verify those numbers yet but they seem appealing for sure !

My Costco expenses are high because it literally is the only store I go to unless I have an emergency. It's not only for groceries. Yes, I buy too much stuff I don't REALLY need in Costco but only on discounted items. I did not keep the details of my Costco purchases so I do not know exactly where the 5K went. Not great but I'm working on it.

@Sun Hat , I initially took my life insurance(including a disability insurance since it was only 0.75$ more per month at the time) when I bought the house instead of a mortgage insurance for the value of the house. Once I finished paying the house, I decided to keep it going considering the money will go to my parents and/or siblings. I might get rid of it later if I get a big enough stash for them but knowing I will leave them more money if I die makes me happy.

If I forgot to answer a question, let me know !!

Sorinth

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Re: Canadian case study - 34 yrs old
« Reply #4 on: April 10, 2018, 10:09:41 PM »
Looks like you are doing quite well. Your mistake in computing being FIRE now was probably using the 4% rule on your net worth rather then your invested assets. But depending on how much the new place costs you might be fairly close after you sell/move.

You should definitely max out your TFSA as soon as you read Canadian Couch Potato's stuff. As for your GFs 50K, it's not a bad idea to keep a decent chunk of money in an emergency fund, but 50K sounds like way more then she needs. So perhaps the way to get her started is to say keep 25K in a high interest savings account as her emergency fund, and invest the other 25K. A lot of people are intimidated by investing and think you need to be really smart and so just stick with what they know (Savings account). So it would probably help if you could show her how easy it is, and with places like Questrade it really is pretty easy. Getting a big check from the government at tax time if she contributes to RRSP might also give her a nice incentive to invest more.

By the way your Hydro bill seems insane, I'm in Montreal and I'm usually 600-700 range. I think I'll have to check out the data only thing, as like you I pretty much never talk on the phone, it's all text. I'm currently at $35/month with Koodo so cutting that to $20 would be pretty sweet.

gerardc

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Re: Canadian case study - 34 yrs old
« Reply #5 on: April 10, 2018, 10:29:28 PM »
How could you amass a $800k net worth at 34 if you only earn 60k per year? How long have you been working at that salary? or maybe that includes your girlfriend too.

I'm from QC too and I spotted a few false friends from your post. Always funny to see those. My favorite example is QCers using "deceive" instead of "disappointed". I think Americans use "deductible" instead of "franchise" for insurance. :)

Lews Therin

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Re: Canadian case study - 34 yrs old
« Reply #6 on: April 11, 2018, 06:07:56 AM »


For my expenses, cell phone is high but one of my coworker sent me a way to drop this significantly. The idea was to buy a "data only" plan and add an IP phone service to it.
Fido has a 2GB plan 15$/month. (available via costco)
Then you use an IP phone using your phone. My friend is using fongo.

One time fee of 25$ to keep your phone number
One time fee of 7$ to get rid of the ads on the mobile app.
20$/year to have unlimited text messaging.
If you talk a lot on your phone, you must be careful not to bust the 2GB limit if your not on wifi. Since I hate speaking on the phone, this won't be a problem.
It would cost about 20$/month. I did not verify those numbers yet but they seem appealing for sure !

My Costco expenses are high because it literally is the only store I go to unless I have an emergency. It's not only for groceries. Yes, I buy too much stuff I don't REALLY need in Costco but only on discounted items. I did not keep the details of my Costco purchases so I do not know exactly where the 5K went. Not great but I'm working on it.

@Sun Hat , I initially took my life insurance(including a disability insurance since it was only 0.75$ more per month at the time) when I bought the house instead of a mortgage insurance for the value of the house. Once I finished paying the house, I decided to keep it going considering the money will go to my parents and/or siblings. I might get rid of it later if I get a big enough stash for them but knowing I will leave them more money if I die makes me happy.

If I forgot to answer a question, let me know !!

Cell Phone: Magical free option from Google - If you look on Gmail, there's a make a call option. (on computors/laptops) I use that for calling people, for both CAN and US for free. It could be helpful.
You don't think the actual value of the house + your stash is enough for your parents/siblings? (800k is pretty significant!)

For your GF, like people have said, invested in a TFSA with safe options (to ensure she can always use it, over an RRSP); since that much in cash is surprising, every year it will slowly be eroded by inflation.

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #7 on: April 11, 2018, 07:49:40 AM »
@Sorinth You are right, I was calculating on my net worth instead of investments. I know better now thanks to you guys :)
I will max out my TFSA as soon as I'm done with my homeworks of figuring out questrade. It should be in a a couple of days.
I love the idea of splitting my GF's 50K. I think she'll be more secure this way and it won't be sleeping anymore. Then, she'll know how to invest more later on.

Yes, hydro is insane... I just doublechecked on the hydroquebec website to estimate the amount since I'm pretty sure I added all my hydro expenses :
    Facture annuelle estimée
    3 100 $ (taxes incluses)
    Environ 32590 kWh par année
So yeah, I was right, lol.  The reason is mostly that my house is ENORMOUS... (and I really don't need it to be)

If you try the fido trick, my friend told me it works better if you go at costco instead of fido. The reason is fido only makes this plan available if you have another service with them. However, costco doesn't care and will give you the plan anyway. I looked really fast last now and it's 15$/3GB now. (seems to be a promotion)
But like I said before, I never tried this so I'm just sharing information.

@gerardc I did get to 800K for a couple of reasons. The main reason is that I started working fulltime (40hrs/week) at 16 years old while still in high school. (minimum wage 7$/hour at the time) At 18, I changed job and continue fulltime with college (11$/hour). I started my "real" job when I was 20 and I'm there ever since. I started with a salary much lower but like I said, I"m a workaholic so I tend to work many many hours. This has some side effects.
1- More overtime work so bigger salary (sometimes x2)
2- No free time to spend anything. All I was doing was working and sleeping (and putting all the $ on the mortgage)
I'm not saying it's a good way to live life but I'm an excessive person... When I start something, I'm all IN. The way I see it now is I invested in my future while having fun at work.
I still love my job but I try to limit the hours now and have more social life. However, it's really hard for me since I've been crazy busy since I was 16yrs old.
(quick story on that. The first week I decided to work 40 hours only, I got so bored that I started uber driving... It was super fun but I stopped 1 week after realizing I did not work less hours to replace them with uber)
It's still a struggle but I'm getting there :)
Also, another big factor of the 800K net worth was house appreciation. I bought it at 20yrs old when the market was booming but not crazy expensive as today. My house value doubled so that helped too !
(Sorry for the long life story but was needed in order to understand how I got there)

Haha, yes. I'm not perfectly bilingual. Ok, one more life story. I did not speak english in high schoool. I knew a few words like toaster and muffler but that it. :P
But I wanted to study in computer science so I registered in an english college thinking it will have more opportunities this way (which turned out to be true, woohoo).
However, the first day of college was a nightmare... I still remember this as clear as day. "Hi, my name is Randall Best, welcome to math for computer science". Then he turns around facing the board and starts writing on the board while explaining. I couldn't understand a freaking thing. I copied the board and wrote all the things I heard and tried to make sense of it at night with a dictionnary. It was a pure nightmare... lol.  It took a few weeks of INTENSE work to get most of what the teachers were saying. (remember, I was still working full time also)
It made me realize that we can adapt to anything when we don't have a choice and must go through something. The nightmare eventually ended and one of my teacher found me my job without even asking for it because I ended with a 80% average. (98% in programming and like 70% in english litterature) Ok, I'll stop the story here because I could talk about this for hours, haha.

@Canadian Ben Yes, google talk is perfect to call but you cannot receive any call from it. I cancelled my home phone as soon as I got a cell so I need a way for people to reach me. I use google talk if I need to call in the US for free :)
No amount of money is enough for my parents :)  Yes, 800K is a lot and I did not realize I had this much when I decided to continue with the insurance. However, 1.1million is even better ! But you guys are right, I think I'll get rid of it when I reach the whole million.

Sorry for all the life stories :)
« Last Edit: April 15, 2018, 05:46:28 AM by Intrigue »

Lews Therin

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Re: Canadian case study - 34 yrs old
« Reply #8 on: April 11, 2018, 08:04:06 AM »
If you're looking for investing advice, I'd skip to "frugal tuque on Canadian investing" (Part 1 and part 2) on the MMM website, then go through couch potato.

MMM's website is more the lifestyle/background information, which won't give you much information about what to do with your investments.

Then when you're comfortable with investing, you can return to MMM and read it all in detail for the mental shift.

PoutineLover

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Re: Canadian case study - 34 yrs old
« Reply #9 on: April 11, 2018, 08:22:08 AM »
Hey, I'm in Montreal so we're practically neighbors!
Another vote for Tangerine, the interest on savings is pretty good if your gf doesn't want to invest. I have a referral code in my signature. Until April 30, we'd each get $50, and the rate is 2.5% on savings for the first 6 months, and 1.1% after that, but they often have promotional extra interest offers. Maybe she would consider putting half in investments, and half in savings. You could also look into GICs, there's usually a term on it and the interest is slightly higher than savings with no risk.

chickinyow

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Re: Canadian case study - 34 yrs old
« Reply #10 on: April 11, 2018, 10:44:34 AM »
How could you amass a $800k net worth at 34 if you only earn 60k per year? How long have you been working at that salary? or maybe that includes your girlfriend too.

I'm from QC too and I spotted a few false friends from your post. Always funny to see those. My favorite example is QCers using "deceive" instead of "disappointed". I think Americans use "deductible" instead of "franchise" for insurance. :)

Appreciation on the house price I'm guessing. Most of the net worth is the house.

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #11 on: August 25, 2018, 08:50:25 PM »
Status update :
Per your suggestions, the checking account is now really low but :
I maxed the TFSA (Now has a 59K value) in VGRO.
I am on my way to fill my RRSP too (now has 20K more) in VGRO too.
My other funds went from 100K to 110K each.
NW is now at 848K.

I am starting to see the snowball effect and it's amazing.
Looking at the stock variations is crazy addictive...
I don't believe the numbers I see but I could be a NW millionaire next year... :-O
I wanted to thank you again for your help.

I'll be able to FIRE next year when I sell the house and buy a much smaller one.
I am now trying to find information on early retirement in canada and I can't find any good information.
I know I can't take any money out of my RRA until I'm 65.
Is it a good idea to start getting money out of the RRSP before 65 or should I just get the 4% out of the margin account only ?
If you guys have hints on where I could get this information, I'd really appreciate it !
I'll probably meet with a financial planner but I want to do some research before.

Thanks again !

gerardc

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Re: Canadian case study - 34 yrs old
« Reply #12 on: August 25, 2018, 09:57:12 PM »
I'll be able to FIRE next year when I sell the house and buy a much smaller one.
I am now trying to find information on early retirement in canada and I can't find any good information.
I know I can't take any money out of my RRA until I'm 65.
Is it a good idea to start getting money out of the RRSP before 65 or should I just get the 4% out of the margin account only ?
If you guys have hints on where I could get this information, I'd really appreciate it !
I'll probably meet with a financial planner but I want to do some research before.

I see your house is a large fraction (> 50%) of your net worth so once you sell it and invest the proceeds in a taxable account, you'll get a decent chunk with which to live until 65, at which point your RRA/RRSP will have grown... I don't see the need to start pulling from those relatively small accounts earlier than that.

FIRE47

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Re: Canadian case study - 34 yrs old
« Reply #13 on: August 29, 2018, 01:40:44 PM »
Something doesn't add up - how did you amass so much on a relatively low salary especially with Quebec taxes, and assuming you might have been making even less earlier in your career.

It can't be market gains because most of the NW is in your house which you said you were throwing all your money at until a few years ago.

Did you used to make way more money? Is your pay 60k net and not gross? Did your house increase 2-300k in value? Did you inherit a couple hundred thousand at some point or get some help with the downpayment? Do the numbers include your GF?

And all of this while being relatively uninformed about what all of your money was doing?

Either way you are doing great (obviously) but I don't think we have the whole story - with annual expenses of 24k and CDN/QC taxes taking another 10-12k bite that leaves you with 25k a year. Assuming you started at 22 (you said you work in software so just guessing you have a degree of some kind) it's hard to see how you got to $840k.

What are we missing?

*Edit* Sorry just saw you started working at 16 and sometimes make double the 60k because of OT and your house doubled in value - that would explain it.
« Last Edit: August 29, 2018, 01:46:42 PM by FIRE47 »

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #14 on: August 29, 2018, 09:06:34 PM »
Yup, mostly overtime and value of the house more than doubled since I bought it. The evaluation went from 239k to 534k so it was a good move.
I started working in IT when I was 20 after a 3 years college degree.
I bought the house when I was 20 years old, a few months after starting my IT job.
My dad had to endorse me for the house and I'm still thankful for that but he did not contribute to payments.
I never inherited any money, had to work for every penny I've got :)

I don't know what to tell you... it clearly adds up since it's my reality.


So the best plan is to used my non-registered account to withdraw the 4% until I reach 65.
But I doubt I'll have enough to reach 65 only with the non-registered account.

Once the house is sold, I'll have about 250K-300K in the non-registered account that will have to last 30 years. (the rest will be on a much smaller house or condo)
Maybe my math is wrong but it won't last considering I need 24k/year until I reach 65.

Freedomin5

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Re: Canadian case study - 34 yrs old
« Reply #15 on: August 30, 2018, 05:48:06 AM »
For early retirement advice specifically to Canada, try https://www.millennial-revolution.com

They’re a Toronto couple who retired at around 30. It’s a mix of lifestyle and financial posts, but it has some good info on managing finances after early retirement.

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #16 on: September 04, 2018, 08:08:23 PM »
Thanks. I'll start reading it next weekend :D

Goldielocks

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Re: Canadian case study - 34 yrs old
« Reply #17 on: September 06, 2018, 01:27:07 PM »
Please reconsider that life insurance.  $900 a year is a LOT.  I am assuming it is term life insurance?   A non-smoking male in his 30's should be paying $67/yr for $100k in insurance.. even assuming that you pay $0.75 for disability, you have $1 million to $1.5 Million in life insurance.  That is nuts!

I just reduced ours (like you I had trouble cutting it entirely), but we pay just under $500 for two people in mid 40's.  Our equity covers any other dependent / spouse needs if we die.

If you die,your parents / siblings will share your $805k, unless you have added your GF to your will, have another cohabitation agreement that covers this, or she is actually a common-law spouse.

That is a lot of money to return to your parents / siblings, truly.  Instead, put the $900 a year into another investment, use some for disability insurance if you don't have any other through work...   Or, just use the money to spend more time with your family, that matters, too.

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #18 on: September 06, 2018, 08:40:36 PM »
whoa, 67$/year sounds pretty sweet to me.

It's not term insurance but something called universal insurance.... whatever that means.
I'm gonna do some research this week-end on this.
I bought this when I was 20 years old and I must shamely admit that the younger version of me did not shop for it... Spoke with 1 advisor and took whatever he recommended.
And for some reason, I never challenged this like I do for everything else because I wanted to keep the insurance.

I'm not ready to drop it completely but you are right, I might be paying too much for it.

Thanks a lot for opening my eyes :)

reeshau

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Re: Canadian case study - 34 yrs old
« Reply #19 on: September 07, 2018, 06:23:20 AM »
whoa, 67$/year sounds pretty sweet to me.

It's not term insurance but something called universal insurance.... whatever that means.

Universal insurance = life insurance + a crappy wrap-around savings "investment" to avoid taxes, for those who are so rich they can't use normal ways to do that.

Get out of it ASAP.  Get term life.

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #20 on: September 14, 2018, 02:34:48 PM »
Decided to take your advice and got RID of it.

woohoo ! 900$/year gone in a few mins on the phone... WIsh I could make a few more phone calls like that :)

Goldielocks

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Re: Canadian case study - 34 yrs old
« Reply #21 on: September 14, 2018, 02:55:06 PM »
Happy dance! 

Post back here if you find another big win.  Maybe you can help me out, too!

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #22 on: March 23, 2019, 03:37:07 PM »
Mini status update :

My net worth just passed the 900K mark. I'm crazy happy about it and I can hardly believe it...

The renovations on the house are in progress but it's going slowly because I do a lot of overtime these days and I don't have much time left to work on the house.
Slowly but surely !

However, I have on more question for you.

Now that my TFSA and RRSP are maxed for 2019, it's time for me to open a non-registered account with questrade.
I was thinking to continue with the plan and buy VGRO until I have enough money to FIRE.
Is it still a good plan ?

I know non-registered accounts are more complicated at tax times but I don't know much more than that.
Can I maintain something on the side to make it easier ?
(I already have an excel sheet where I keep track of my transactions (qty, price/unit, date, commissions but is that enough ?)

Thanks in advance !

Lews Therin

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Re: Canadian case study - 34 yrs old
« Reply #23 on: March 23, 2019, 04:15:11 PM »
Google TheRichMoose and Swap Based ETFs.

ETFs that don't pay dividends, so you only get a tax hit when you sell (capital gains). You'd have nothing to fill out at tax time until you're FIREd and start selling some off.

Goldielocks

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Re: Canadian case study - 34 yrs old
« Reply #24 on: March 23, 2019, 09:29:55 PM »
If you earn less than $46k a year, look at dividends.

If you want simpler taxes, buy something without dividends and gas capital gains only.

Just don't put your interest only funds, like bonds, in non registered.

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #25 on: March 24, 2019, 10:32:58 AM »
@Lews Therin I started to look into the swap based etfs and from what I read, it will change this year since it is in the 2019 federal budget. Also, horizons suggests not to buy their etfs until we get more details on the modifications from the budget because you might be forced to liquidate them and get a tax hit on all of it.

@Goldielocks I do not necessarily want simpler taxes, I just want to track the right information so I don't have any surprises next year at tax time.


Lews Therin

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Re: Canadian case study - 34 yrs old
« Reply #26 on: March 24, 2019, 10:59:14 AM »
Hmmm bummer for the SWAP.

Anyways, with you excel sheet, you have everything you need to keep the taxes simple.

it's less simple for Non-reg than registered, but still very simple! You'll be fine.

Goldielocks

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Re: Canadian case study - 34 yrs old
« Reply #27 on: March 25, 2019, 09:57:38 AM »
@Lews Therin I started to look into the swap based etfs and from what I read, it will change this year since it is in the 2019 federal budget. Also, horizons suggests not to buy their etfs until we get more details on the modifications from the budget because you might be forced to liquidate them and get a tax hit on all of it.

@Goldielocks I do not necessarily want simpler taxes, I just want to track the right information so I don't have any surprises next year at tax time.
Ha!   There are years when simpler taxes make a lot of difference! 

The point is that when you have many types of accounts for investments, whether to put dividends into registered and cap gains into non-registered, or vice versa, doesn't really matter in the long run, tax wise, for the same investments..(minor variations for US foreign not in TFSA).  it does impact ease of taxes, especially if you DRIP.

Goldielocks

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Re: Canadian case study - 34 yrs old
« Reply #28 on: March 25, 2019, 10:16:07 AM »
GF --

I recommend two options for an ultraconservative newbie

1) Open a TFSA, and put the $'s into Bonds - buy bonds directly, not a bond fund.  She can choose governement bonds or corporate bonds.   If she chooses this one, Scotia Itrade has slightly lower bond commission fees.  Note that Questrade does not handle bonds as well, they optimize their index funds and stock services.  Bonds can be sold if needed on the open market, for a loss or a gain, so she has access to money.  BUT, are very conservative as in she will know absolutely what she is going to get at the end of the term. 

 If she does this, create a mini bond ladder, and hold $20k in some sort of fee advantages savings account in the TFSA for a year... I see rates of 3% for limited time on new contributions right now.

e,g This year, buy:
$6k of10 year bond,
$6k of 9 year,
$6k of 8 year,
$6k of 7year,
$6k of 6 year bonds,
$6k of 5 yr bonds,
$6k of 4 year bonds..
.... then hold $8k as cash in a high interest savings account at 3%. 

Each year in future, buy 10 year bonds with the new money saved and as the current year bonds come due.  Then, going forward, she will always have $6k or more coming available each year, for emergency funds or to re-invest... and will be getting a consistent 10 year bond return rate which is normally a lot better than GIC and savings accounts.

Yes, this is not as great as the stock market, but stock market investing is not for everyone, and I am trusting what you say about her being ultra conservative.

2)  Second option is to open a TFSA account like Tangerine.  The fees are fairly high at 1.07% per year, but on $50k that is not too bad in total dollars vs returns and there is no buy/sell fee,   This option is great, because you then want her to put $500/mo into the TFSA, which can be added directly to the fund account without any other fees.   Have her choose one of the two conservative mutual fund options (the screener is simple to use).  This account is great for getting your feet wet, without much scary financial information to process.   Once she is happy for a year or two, then switch to a lower fee account with more options and lower fees.

Lews Therin

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Re: Canadian case study - 34 yrs old
« Reply #29 on: March 25, 2019, 10:21:27 AM »
Goldie: intrigue has lots invested already, just looking for confirmation of how to best set up non registered accounts ;)

Goldielocks

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Re: Canadian case study - 34 yrs old
« Reply #30 on: March 25, 2019, 01:50:26 PM »
Goldie: intrigue has lots invested already, just looking for confirmation of how to best set up non registered accounts ;)
Yeah, but when I read the OP, there was the GF question, and it looked like we were cherry picking which questions to answer and ignoring some of the others...

Lews Therin

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Re: Canadian case study - 34 yrs old
« Reply #31 on: March 25, 2019, 02:04:00 PM »
Op is last year!

Goldielocks

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Re: Canadian case study - 34 yrs old
« Reply #32 on: March 25, 2019, 02:17:31 PM »
Op is last year!
Yeah,  well, sometimes when reply, I do double check the original post to ensure I know what I am replying to...  LOL.

Intrigue

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Re: Canadian case study - 34 yrs old
« Reply #33 on: March 25, 2019, 08:44:27 PM »
haha,

I'll at least you give an update on the GF decisions since last year   :P

Last year, she decided to put half in VBAL and half in a tangerine high interest savings account.
In december, she got more comfortable with the stock market (even if it crashed around that time) and she's now investing her new money into VGRO.

She's keeping the tangerine account for now because it makes her feel secure.
It's not perfect but it's a lot better than having all of it in a chequing account like before :)

The Bond ladder is a good idea. If she starts to be scared again, I'll propose it to her.

 

Wow, a phone plan for fifteen bucks!